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M-net : Interim Report
Release Date: 22/11/2002 07:10:17 Code(s): MNS
M-NET : INTERIM REPORT
Electronic Media Network Limited
(Incorporated in the Republic of South Africa)
(Registration number 1985/002853/06)
Share code MNS ISIN ZAE000014304
("M-Net" or "the company" or "the group")
INTERIM REPORT
Group results for the six months ended 30 September 2002 were as follows:
ABRIDGED INCOME STATEMENT
Year
Six months ended ended
30 September 31 March
2002 2001 2002
(reviewed) (reviewed) (audited)
R`m R`m R`m
Revenue 748 620 1 287
Cost of sales and provision of services 540 439 936
Gross profit 208 181 351
Operating costs 117 108 198
Operating profit 91 73 153
Net finance income - 1 5
Profit before taxation 91 74 158
Taxation 29 23 59
Net profit for period 62 51 99
Earnings and headline earnings
per share (cents)
- basic 24,5 19,0 37,0
- diluted 24,4 19,0 36,9
Dividend per share (cents) - - 21,5
Number of shares used to compute earnings
and headline earnings per share (million)
- basic 253 268 266
- diluted 255 270 268
ABRIDGED BALANCE SHEET
30 September 31 March
2002 2001 2002
(reviewed) (reviewed) (audited)
R`m R`m R`m
ASSETS
Non-current assets
Property, plant and equipment 116 125 121
Current assets 947 794 873
Net cash 98 - 4
Total assets 1 161 919 998
EQUITY AND LIABILITIES
Capital and reserves 205 175 143
Non-current liabilities 232 194 198
Accounts payable 47 38 13
Deferred taxation 185 156 185
Current liabilities 724 545 657
Net interest bearing debt - 5 -
Total equity and liabilities 1 161 919 998
ABRIDGED CASH FLOW STATEMENT
Year
Six months ended ended
30 September 31 March
2002 2001 2002
(reviewed) (reviewed) (audited)
R`m R`m R`m
Cash generated from operating activities 105 85 180
Net finance income - 1 5
Taxation paid (9) (8) (36)
Dividend paid - - (55)
Working capital 8 (53) (34)
Foreign currency translation reserve (1) - 9
Cash flow from operations 103 25 69
Utilised for:
Property, plant and equipment (9) (3) (13)
Share buy-back - - (34)
Net cash flow 94 22 22
Net cash/(Net interest bearing
debt) at beginning of period 4 (27) (18)
Net cash/(Net interest bearing
debt) at end of period 98 (5) 4
STATEMENT OF CHANGES IN EQUITY
Share Foreign
capital and currency
share Retained translation
premium earnings reserves Total
R`m R`m R`m R`m
Balance at 1 April 2001 116 8 - 124
Share acquisitions and cancellations (33) - - (33)
Acquisition of shares held as
treasury stock (1) - - (1)
Foreign currency translation reserve - - 9 9
Net profit for period - 99 - 99
Dividends paid - (55) - (55)
Balance at 31 March 2002 82 52 9 143
Balance at 1 April 2001 116 8 - 124
Net profit for period - 51 - 51
Balance at 30 September 2001 116 59 - 175
Balance at 1 April 2002 82 52 9 143
Net profit for period - 62 - 62
Balance at 30 September 2002 82 114 9 205
SUPPLEMENTARY INFORMATION
Year
Six months ended ended
30 September 31 March
2002 2001 2002
(reviewed) (reviewed) (audited)
R`m R`m R`m
Included in operating profit:
Depreciation for period 14 13 26
Net finance income: - 1 5
Interest received 2 5 11
Interest paid (2) (4) (6)
Capital expenditure 9 3 13
Capital expenditure committed or authorised - 8 8
Programme and film rights commitments 542 411 575
Number of ordinary shares in issue (million) 268 283 268
Net asset value per share (cents) 76 62 53
Rand/naira exchange rate at
30 September 2002: R1 = N12,47
Related-party transactions:
The transactions with
related-parties for period
are summarised as follows:
Affiliates:
Subscriber revenues received 472 376 815
Advertising recoveries paid 6 8 15
Transmission costs paid 9 7 14
Marketing contributions paid - 8 15
Fees paid for payroll services - - 1
The balances of receivables and payables
between the group and related parties are:
Receivables
Affiliates 161 128 152
Joint ventures 18 16 18
Payables
Affiliates 48 19 42
NOTES:
1. These consolidated condensed interim financial statements for M-Net for the
six months ended 30 September 2002 were prepared in accordance with AC 127
Interim Financial Reporting. The accounting policies used in the preparation of
the interim financial statements are consistent with those used in the annual
financial statements for the year ended 31 March 2002.
2. Segmental information
M-Net is involved in the acquisition, packaging, scheduling and broadcasting
of programming and related advertising activities, and has interests in various
operations. The company has no separable operations and, from a geographical
standpoint, although it broadcasts outside South Africa, its operations are
conducted from South Africa.
INTRODUCTION
M-Net shares are linked to those of SuperSport International Holdings Limited
and trade as indivisible units on the JSE Securities Exchange South Africa and
on the Nigerian Stock Exchange, and will continue to do so for the foreseeable
future.
M-Net continues to provide subscribers across the African continent with
world-class entertainment on its 13 channels: M-Net, CSN, M-Net Africa, Movie
Magic, Movie Magic 2, Movie Magic 2 (Africa), kykNet, Action TV, KWorld, Series
Channel, Channel O and the Big Brother and Idols channels.
RESULTS
Despite challenges and difficult trading conditions in the media environment
globally, M-Net produced satisfactory results for the period under review. Total
revenue increased to R748 million from R620 million in the same period last
year. Overall the subscriber base on the continent remained stable, but
subscription revenues were bolstered by a continued migration of subscribers
from the analogue to the digital platform.
At 30 September 2002, the subscriber base in South Africa comprised 409 000
analogue and 640 000 digital subscribers. Subscribers across the rest of the
continent were spread as follows:
Number of subscribers (`000)
Botswana 18 600
Ghana 6 000
Kenya 14 900
Namibia 30 300
Nigeria 58 800
Tanzania 8 100
Uganda 6 000
Zambia 13 200
Other 83 300
Advertising revenues increased, thanks to reality-television shows such as
Big Brother II and Idols, as well as from M-Net`s DStv channels. Oracle Airtime
Sales`s gross advertising revenues from all the M-Net channels increased from
R164 million to R193 million, compared with the same period last year.
Headline earnings per share increased from 19,0 cents per share to 24,5
cents, partly due to share buy-backs and strict cost controls.
DIVIDEND
It is M-Net`s policy to pay a single dividend at the end of each financial
year.
PROSPECTS AND DEVELOPMENTS
M-Net packages entertainment channels, which are distributed on analogue and
digital platforms across the continent. In line with current international
trends, reality-television productions continue to attract strong audiences,
thereby bolstering advertising revenues.
Three major reality shows were screened during the period (Idols, Big Brother
II and Fear Factor). M-Net was only the second channel in the world to produce a
local version of the UK-format hit Pop Idols, while the success of the first
series of Big Brother prompted the commissioning of a second series. All three
reality shows were innovative examples of multimedia productions combining
television, the internet and telephony. Big Brother II not only had seven
dedicated television channels, but also featured an interactive SMS application,
the first on South African television.
Another first was the local version of Gladiators, produced by M-Net in
Nigeria, that also proved successful.
Subscription revenues remain M-Net`s primary source of income. Whilst the
subscriber base is not expected to grow appreciably, revenues should benefit as
subscribers convert from the analogue to the digital bouquet. M-Net`s financial
performance will, however, continue to be vulnerable to currency devaluation.
During the period under review M-Net continued its support of the non-profit
organisation Twilight Children. It also aired a series of short programmes
called M-Net Cares, which aims to create a platform for non-governmental
organisations and raises awareness of organisations that assist the less
priviledged. In addition, M-Net established a support initiative with the
following organisations: Cotlands Baby Sanctuary, Hospice for Children, Disabled
People of South Africa and the SPCA. M-Net also televised a celebrity Big
Brother series that raised more than R1 million for charity organisations.
The company remains confident that its strong focus on programming, combined
with talented, skilled and enthusiastic people, will lead to a solid performance
going forward.
EMPOWERMENT
In the light of the poor state of the global equity markets, it was decided
to extend the Phuthuma Futhi share scheme for another three years. We hope that
the 32 258 shareholders will realise gains in due course.
CORPORATE GOVERNANCE
M-Net is committed to the principles of openness, integrity and
accountability, as advocated in the King Report on Corporate Governance for
South Africa 2002 (King II). The directors recognise the need to conduct the
business of the enterprise with integrity and in accordance with generally
accepted corporate practices. Accordingly, the board has reviewed King II and
the requisite improvements to the company`s corporate governance procedures and
policies are in the process of being implemented.
The company`s auditors, PricewaterhouseCoopers Inc., have reviewed the
abridged consolidated financial information contained in this report. The review
opinion is available for inspection at the company`s registered office during
business hours.
CHANGE IN DIRECTORATE
Ms Salukazi Dakile-Hlongwane was appointed as a director of M-Net with effect
from 11 October 2002.
On behalf of the board
Khulu Sibiya Glen Marques
Chairman Chief executive
21 November 2002
Directors: KB Sibiya (chairman), DDB Band, JP Bekker, JS Craib,
S Dakile-Hlongwane, HR Enslin, PM Jenkins, GP Marques, JRD Modise,
ACG Molusi, VB Mona, KD Moroka, SJZ Pacak, CJ Sidego, JJ Volkwyn,
T Vosloo
Alternate directors Company secretary
SF Ward (British), I Charnley G Kisbey-Green
Transfer secretaries:
Computershare Investor Services Limited
70 Marshall Street
Johannesburg 2001
(PO Box 1053, Johannesburg 2000)
South Africa
Registered office:
11 Grove Street
Randburg 2194
(PO Box 2963, Pinegowrie 2123)
South Africa
Registrars/Transfer secretaries in Nigeria:
City Securities Limited
5th Floor, Primrose Tower
17A Tinabu Street
Lagos, Nigeria
(PO Box 9117, Lagos, Nigeria)
Date: 22/11/2002 07:10:15 AM Produced by the JSE SENS Department
